"Michelob has always been a connoisseur's beer, so it has a lot of credibility in that area," said Keith Levy, A-B's VP-brand management.

Leaving Heineken alone
Michelob -- an 111-year-old brand that has long been positioned as A-B's trade-up option from flagship brew Budweiser -- has been used by A-B in the past as a counter to imports during their various surges, particularly in the 1980s to counter the initial rise of Heineken and Corona.

But the specific targeting of craft-beer competitors is a departure for Michelob.

The shift of Michelob to a craft-fighter in part reflects A-B's burgeoning portfolio of imports, which can compete more directly in that category. It signed a 20-year agreement last year to import InBev's portfolio of brands such as Stella Artois, Bass Ale and Beck's. Separately, it cut similar import deals with brands such as Grolsch, Tiger and Budweiser Budvar.

But A-B executives admit candidly that their vast portfolio -- which has been bolstered by product introductions, myriad distribution agreements with craft brands and even a few bottled-water and liquor products -- has hurt their focus on flagship core brands.

Doubling up
A-B told Wall Street analysts last week that its wholesalers carry 147 brands on average, more than twice as many as they carried five years ago.

So now the brewer is focusing hard on its core brands, with plans to boost total media spending significantly -- with virtually all of the increases going to Budweiser, Bud Light, Michelob and Michelob Ultra.

A-B executives said Michelob's craft strategy will not apply to Ultra, whose relationship with Michelob as its sponsor is being diminished. Instead, Ultra will be pushed as a young-skewing, low-carb lifestyle offering, a positioning similar to the one A-B was spending upward of $80 million a year to establish for Budweiser Select, with little success following a strong 2005 launch year.

Less media for Select
"You're going to see us reduce the reliance on the name Michelob with Ultra, maybe even to the point of taking it off the packaging down the road," Mr. Levy said.

Select is expected to see less national media going forward, and instead will be marketed primarily in the handful of urban areas where it's gained traction. "We need to fish where the fish are with that one," said one person familiar with the strategy.

Budweiser and Bud Light both will see significant spending increases in 2008, executives said. While Bud Light will continue its long-running sophomoric humor campaign, Budweiser is shifting to a strategy of dubbing itself the "Great American Lager."

But Michelob's strategy shift is the most dramatic among the core brands, thanks in part to its new agency. Euro -- which did some minor project work for A-B on the 2004 launch of caffeinated beer Bud Extra -- beat out A-B roster shops DDB, Chicago, and Cannonball, St. Louis, in a pitch for the assignment.

The shift in focus from imports to crafts made the win possible for the agency, which works on Heineken's Dos Equis brand out of its New York office.

Euro's Chicago CEO, Ron Bess, led the DDB pitch that won agency-of-record duties on Bud Light from D-Arcy, Masius, Benton & Bowles in the mid-1990s.